Singapore state investor Temasek said on Tuesday its net portfolio value had swung back to growth with a 1.8% gain, adding that profits from investments in the United States and India helped cushion the impact of underperformance in China.
Significantly, Temasek's exposure to the Americas surpassed China for the first time in a decade, accounting for 22% of its portfolio versus China's 19% during the year ended March.
Temasek said it is taking a cautious approach to China and would continue to monitor the country's government policies this year. Aside from Singapore - its biggest market accounting for 27% of its portfolio, the U.S. would continue to be a leading destination for its capital, followed by India and Europe.
The firm added it plans to step up investments in Japan and Southeast Asia. Temasek is also considering building its presence in the Middle East, Deputy CEO Chia Song Hwee told Reuters in an interview.
"The economies (in the Middle East) are going through transformation and opening up and also the policy directions are more investor friendly as well as market-driven," he said.
"So we are clearly seeing the change and we are beginning to spend time looking at opportunities and evaluating."
The rise in the value of Temasek's portfolio to S$389 billion ($288.5 billion) compares with last year's 5.2% drop which had marked the first decline since 2020 amid global economic uncertainties and a higher interest rate environment.
Chia said the firm would continue to "reshape" its portfolio. That includes in China where geopolitical tensions remain a concern and focusing on companies that are centred on the domestic market and rely less on exports, he said.
"Portfolio never stays static. And what we try to do is to reshape our portfolio time and time again to be future-proof, future-ready while making sure that we can earn a long-term sustainable return," he added.
"Our portfolio is still very large in China, even at 19% it is still a large portfolio for us."
Chinese companies that Temasek has invested in include Alibaba Group and Tencent Holdings, owning stakes of less than 1% in both. It also invested in Chinese electric vehicle company BYD during the latest financial year. The size of that holding was not disclosed.
In the United States, its investments include its stake of around 3% in asset manager BlackRock and holdings of less than 1% in credit card payment companies Visa and Mastercard.
Regardless of the outcome of the U.S. election in November, the world's largest economy will continue to be an "interesting market" for Temasek due to innovation and opportunities in the private credit and technology sectors, Chief Financial Officer Png Chin Yee said in a separate interview.
Temasek will continue to seek investment opportunities in artificial intelligence and green transition, its head of financial services Connie Chan also said.
In May, Temasek partnered with Canada's Brookfield to invest in Neoen, a deal that valued the French renewable power producer at around 6.1 billion euros ($6.6 billion).
Other global investors have also posted gains driven by a better-than-expected U.S. economy and growing expectations of lower interest rates.
This month, Japan's Government Pension Investment Fund posted an investment gain of $133.3 billion for the January-March quarter, while Saudi Arabia's sovereign wealth fund PIF reported it swung to a profit of $36.8 billion in 2023.
